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On Tuesday, UBS reiterated its Buy rating on Targa Resources (NYSE:TRGP) stock, maintaining a price target of $259.00. Currently trading at $170.41, the stock has shown strong momentum with a 45% return over the past year, despite a recent 18.6% decline in the past week. According to InvestingPro data, analysts maintain a strong bullish consensus with price targets ranging from $157 to $259. The firm's analyst highlighted a quarter-over-quarter increase in the company's estimated EBITDA for the first quarter of 2025, projecting $1,155 million compared to $1,122 million in the fourth quarter of 2024. The expected rise is attributed to robust sales and export volumes of natural gas liquids (NGLs), which are anticipated to be slightly offset by the effects of winter weather and the projection that volume growth will be more pronounced in the latter half of the year. With a current market capitalization of $37.3 billion and trailing twelve-month EBITDA of $4.13 billion, Targa maintains a "GOOD" overall financial health score according to InvestingPro analysis.
Targa Resources anticipates that growth in 2025 will predominantly occur in the second half, aligning with the timing of commercial agreements and producers' forecasts for increased volumes towards the end of the year. UBS's first-quarter EBITDA estimate is modestly below the consensus of $1,163 million. The firm also projects capital expenditures for the first quarter to be $767 million, up from $727 million in the previous quarter.
UBS estimates that the Gathering & Processing operating margin for the first quarter will be $657 million, an increase from $599 million in the fourth quarter of 2024. However, the Logistics and Transportation operating margin is expected to decrease slightly to $624 million from $656 million in the preceding quarter.
For the full year of 2025, UBS's EBITDA estimate stands at $4,827 million, which is above the midpoint of the company's guidance range of $4,650 million to $4,850 million. This optimistic outlook is based on the strong growth projected to drive numbers above expectations. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 15 consecutive years with a current yield of 1.82%. InvestingPro subscribers have access to over 10 additional exclusive insights and a comprehensive analysis of Targa's growth prospects through the Pro Research Report. Moreover, UBS has raised its second-quarter EBITDA estimate for 2025 to $1,165 million, as growth projects that began operations in the last two quarters of 2024 and the first quarter of 2025, such as Greenwood II, Daytona NGL ramp, Train 10 frac, Bull Moose, and GCF Restart, are expected to start contributing significantly in the second quarter.
In other recent news, Targa Resources has been the subject of several analyst updates and corporate developments. The company recently announced a projection for its 2025 adjusted EBITDA that exceeded previous Wall Street estimates, prompting RBC Capital Markets to raise its stock price target slightly from $220 to $221 while maintaining an Outperform rating. Similarly, Citi analysts increased their price target to $227, citing Targa's rapid infrastructure development and the potential for double-digit EBITDA growth over the next two years. Truist Securities also lifted its price target to $235, highlighting the company's extensive expansion projects aimed at enhancing gas processing and natural gas liquids capacities.
CFRA raised its price target to $208, maintaining a Hold rating, and noted an increase in earnings per share estimates for 2025 and 2026. Additionally, Targa Resources has revised its capital expenditure forecast upwards, anticipating higher long-term returns despite a delay in achieving positive free cash flow until 2026. In a corporate update, Targa Resources announced the appointment of Jennifer R. Kneale as President, effective March 1, 2025. This executive change comes as the company continues to focus on its strategic growth initiatives and operational performance.
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